With commercial real estate delinquencies at commercial banks having reached a 17 -year high, one of the big questions we must ask is:

How will the continued decline in real estate values further impact banking?

Many industry insiders, myself included, believe we are currently experiencing a "calm before the storm:' Although we've seen some minor signs that the economy may be improving, it's obvious that the commercial real estate markets have not followed suit. According to several sources, the delinquency rate for commercial mortgagebacked securities pools rose to almost 8% in March. Some are now speculating this number may hit 11 % to 12% by the end of the year. Moreover, the Federal Reserve reports that the delinquency rate for commercial real estate loans at commercial banks at the end of 2009 reached 8.81 %. This is a significant number given the amount of debt that still needs to be refinanced over the next few years and the lack of new sources of capital.